Israel holds consultations over envoy

"There was such an Egyptian announcement and we are holding discussions based on what has transpired," spokesperson Yigal Palmor said.

Egyptian state television said on Saturday that the ambassador was being withdrawn to protest the deaths of five Egyptian policemen killed during an Israeli pursuit of militants who killed eight Israelis near the border with Egypt on Thursday.

The Israeli military has pledged to probe the incident and advise Egypt of its findings.

"The IDF (Israel Defence Forces) will investigate the matter thoroughly and update the Egyptians," a spokesperson told AFP on Friday.

In Thursday's attack at least seven gunmen armed with explosives, grenades and other weaponry, sneaked into southern Israel and fired at cars and buses, killing six Israeli civilians, a soldier and a policeman.

Israel said six of the Negev gunmen were shot dead on Thursday, while a seventh blew himself up. Others are believed to have fled across the Egyptian border.

A senior Israeli military officer briefing reporters on condition of anonymity on Friday said about 10-15 militants were believed to have taken part in the operation, having entered Israel though its largely un-fenced border with the Egyptian Sinai.

He said that at one point they passed about 50 metres (yards) from an Egyptian police post.

Israeli and Egyptian forces have been sweeping the border area in a hunt for any who might have escaped.

It is the second time that Egypt, the first Arab country to have signed a peace treaty with Israel in 1979, has recalled its ambassador from the Jewish state.

In November 2000 Egypt recalled its envoy from Israel to protest over what it said was "the excessive use of force by Israel against the Palestinians after the second intifada," or Palestinian uprising.

Egypt's military chief of staff, Sami Enan, headed to the Sinai on Friday to probe the deaths of the policemen killed a day earlier.

There have been conflicting reports from the Egyptian military and police about how they lost their lives.